Construction Dive's 'mini megacities' to watch: Rochester, Minnesota | Dump Trucks Charlotte NC

Over a period of five days this week and next, Construction Dive will highlight the five most up-and-coming U.S. markets for commercial construction, based on input from Dodge Data & Analytics, industry experts and association leaders. These mostly Midwestern cities are enjoying an influx of new residents, driven by booming job markets and a low cost of living. 

Today we look at Rochester, Minnesota, which saw $4.8 billion in construction starts last year. (Click here for yesterday's story about Omaha, Nebraska.)

British surgeon Dr. William Mayo could not have foreseen the prominence that his medical practice would bring to Rochester, Minnesota, when he hung out his shingle there more than 150 years ago.

Since then, the doctor's office he ran with his two sons has grown to become one of the world's foremost centers for medical care. Still headquartered in Rochester, the Mayo Clinic’s main campus employs more than 34,000 physicians, scientists and staff in a town of 111,000 residents. Encompassing more than 40 buildings in downtown Rochester, its scale is like that of “a large university in a small town,” according to Patrick Seeb, director of economic development and placemaking with Destination Medical Center Economic Development Agency.​

Dedicated to world class medical treatment, education and research, Mayo's commitment to growth and innovation will take a giant leap over the next two decades. A new Mayo-backed health and wellness development, Destination Medical Center (DMC), will give the nonprofit an even bigger presence in its hometown.

“The Mayo Clinic is never finished,” said Seeb. “It’s not as though there’s a singular project that’s going to get built and then it’s complete.”​

The 550-acre DMC will encompass a transit hub, civic center, entertainment and dining spaces, town square and the Discovery Square research, innovation and technology hub that will include residential and mixed-use space. Mortenson, chosen to develop the Discovery Square district in 2016, completed the first phase and is planning the next two. 

The projects will be funded by $3.5 billion from Mayo as well as more than $2 billion from the private sector and $585 million from the state of Minnesota. In 2020 alone, the city will see a 12% increase in construction starts, according to Dodge Data & Analytics. The DMC is expected to generate between 2,000 and 2,700 construction jobs each year, and Minnesota is in line for up to $2.2 billion in additional tax revenue.

The city brings in more than 3 million visitors a year, a large percentage of them patients, and the DMC plan also calls for hotel and residential projects, some of which have already been completed. A new 264-room Hilton Hotel opened last year and Hyatt House, Eleven 02 and a repurposed Holiday Inn called Hotel Indigo are expected to be complete this year.

In what economists call "industry clusters," ancillary projects are also springing up throughout the area, Seeb said. These include an uptick in commercial office space and life science facilities for companies like Boston Scientific, Philips, and WuXi Diagnostics.

With so many new projects in the immediate pipeline — up to $700 million currently — "this really is going to be a boom town," Seeb said.